Pestana v. Kelly CA4

Filed 8/11/15 Pestana v. Kelly CA4 NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (San Joaquin) ----

EDWARD PESTANA,

Cross-complainant and Appellant, C072268

v. (Super. Ct. No. 39201000253689CUMCSTK) MICHAEL J. KELLY, JR., as Co-trustee, etc., et al.,

Cross-defendants and Respondents.

Edward Pestana and his brother, Ernest Pestana, operated a family business.1 After Ernest died, Edward sued Ernest’s widow Irene, Ernest’s estate and Ernest’s trusts in Santa Clara County, alleging that Ernest breached a 1999 oral agreement to pay Edward wages and a commission for certain land development work.

1 We will refer to individuals by their first names for clarity.

1

Meanwhile, Michael Kelly, Jr., the successor trustee of Ernest’s trusts and a special administrator of Ernest’s estate, filed a complaint in San Joaquin County to dissolve the brothers’ corporation, Livermore Acres, Inc. Edward filed a cross-complaint against Livermore Acres and against Michael and Irene individually and as trustees, again alleging Ernest’s breach of the 1999 oral agreement with Edward. The trial court in San Joaquin County sustained Michael and Irene’s demurrer, ruling that Edward was judicially estopped from pursuing a claim based on the alleged 1999 oral agreement because Edward did not disclose the claim in his ongoing Chapter 11 bankruptcy proceeding. Although Edward initiated the bankruptcy proceeding in 1998, the trial court found that in four sets of pleadings filed with the bankruptcy court following the alleged oral agreement, Edward failed to disclose his breach of contract claim. The trial court determined that Edward’s failure to disclose the claim amounted to an affirmative representation to the bankruptcy court that there was no such income or asset. The trial court ruled that the representation worked to Edward’s benefit because it supported the no-asset discharge Edward obtained from the bankruptcy court in 2003. Edward now contends the trial court erred in ruling that he was judicially estopped from pursuing his breach of contract claim, because the 1999 oral agreement occurred after he initiated his bankruptcy proceeding in 1998 and thus was not an asset of the bankruptcy estate. Michael and Irene respond that Edward’s claim was properly barred not just because of the position he took in the bankruptcy proceeding, but also because his claim could only be asserted against Ernest’s estate. We conclude the trial court did not err in ruling that Edward was judicially estopped from pursuing his breach of contract claim. The record supports the trial court’s determination that Edward took inconsistent positions in different judicial proceedings, that his first position was successful, and that the inconsistent positions were not the result of ignorance, fraud or mistake. We will affirm the judgment.